Texts prompt shoppers to pull out their plastic

Consumers who are out and about will spend more if they receive texts encouraging them to shop with a nearby retailer for a chance to win a shopping spree. At least that was the case in a recent pilot conducted by Alliance Data Retail Services, which runs credit card programs for stores, and Locaid, a company that helps brands market to consumers based on their location, for example, by sending them text messages with offers when they are close to a store.

For the pilot, Alliance Data sent 20,500 e-mails to consumers who had a store-branded credit card to one of six retailers in the Easton Town Center, a Columbus, OH shopping mall, asking them to join in a text message pilot campaign. Locaid then sent the 519 shoppers who joined the pilot texts when they were close to the mall encouraging them to use their store-branded credit cards for purchases to be entered in a drawing to win a $5,000 shopping spree at one of the stores participating in the pilot, including Express, The Limited and Pier One.

In the test, which ran from the day after Thanksgiving through New Year’s Eve and was free for the stores to participate in, cardholders who received text messages spent 24% more on average than cardholders who did not receive text messages. Additionally, credit card sales at the stores for the holiday period were 2.5% higher than the retailers had forecast for the period and 4.9% higher than forecast for the day after Thanksgiving.

Shoppers who received the messages also noted that the texts helped prompt them to buy. 39% of shoppers who were sent the messages said that the texts influenced their purchase decisions, 37% said the messages influenced them to visit a specific store and 68% of participants indicated they would sign up for future location-based text message campaigns.

Locaid uses what is called geofencing to detect when a participating consumer is in a specific “fenced” area, for example, a two-mile radius of a mall, and then sends her marketing messages. Geofencing can use a mobile carrier network to determine when a customer enters a specified area or the GPS location data available in smartphones, says Rip Gerber, president and CEO of Locaid.

Gerber says typical costs for such location-based text message programs include the cost to send e-mails asking shoppers to participate, a fee to geofence one or several locations so that Locaid can recognize when a participating shopper enters the area, and a fee for each text message sent.

Alliance Data operates store credit card programs for retailers including Barneys New York and Gander Mountain. Locaid has worked with such retailers and brands as American Eagle Outfitters and Coca Cola on location-based mobile marketing programs.

Express is No. 102 in the Internet Retailer Top 500 Guide, The Limited is No. 406, Barneys New York Inc. No. 168, American Eagle Outfitters No. 65 and Gander Mountain No. 159.